Three kings: Revenues from credit cards and retail advertising, both large industries, will begin flowing over the networks of mobile phone operators.
Both Isis and Google are using a technology known as near-field communication, or NFC, in which a special phone chip communicates through an inch or two of air with a payment terminal. Currently, only 25 of the top 100 U.S. retailers are set up to accept such “contactless payments”—including McDonalds, CVS, and Home Depot. Moreover, only 2 percent of smart phones in use have NFC chips, which means most people can’t yet pay using a digital wallet.
Google stole an early march on the phone carriers when it launched its own mobile wallet last May. The search giant has lined up partners that include Sprint, major card companies, and even New Jersey Transit, which now allows commuters to tap to pay their fares. With its pending purchase of Motorola Mobility, Google is also expected to push the introduction of NFC chips in Motorola phones.
Google won’t say how many transactions are actually being handled, only that it’s accepted at “150,000 merchants.” Gas station convenience stores and fast-food joints like Burger King have been among the first to sign on. To see the gradual march to implementation, you can plug in your zip code on the Google Wallet site to see local stores that accept the technology.
“This is probably similar to 1995 and 1996, the very early days of e-commerce,” says Osama Bedier, Google’s vice president of payments and Google Wallet, who until last summer led a similar effort at PayPal.